Electronics Manufacturing

Electronics manufacturing represents a core pillars of the Make in India initiative, driving the transition from a service-led growth model to a high-value industrial powerhouse. Globally, the electronics industry is a critical component of national security, economic resilience, and digital sovereignty. For India, the sector acts as a multiplier for employment, technology diffusion, and export-led growth, helping correct historical trade imbalances dominated by electronics imports.

Macroeconomic Significance and Key Performance Indicators

Contribution to GDP and Gross Value Added (GVA)

The electronics sector contributes approximately 3.4% to India’s Gross Domestic Product (GDP). Under the vision of a Viksit Bharat, the sector is a priority for scaling up the manufacturing sector’s total share in the national GDP to 25%.

Exponential Growth Trajectory

The domestic electronics production landscape has transformed over the past decade, moving away from low-value kit assembly toward deep component manufacturing.

• Production Volume: Domestic production scaled from ₹1.9 lakh crore in 2014–15 to ₹11.3 lakh crore in 2024–25, representing an approximate six-fold increase.
• Strategic Target: The national roadmap outlines an ambitious target to build a $500 billion domestic electronics manufacturing ecosystem by 2030–31.

Structural Shift in India’s Export Basket

Electronics emerged as India’s third-largest and fastest-growing export category, climbing from the seventh position. It is on track to become the second-largest merchandise export item.

• Export Value: Electronic goods exports registered an eight-fold jump, rising from ₹38,000 crore in 2014–15 to ₹3.27 lakh crore in 2024–25.
• Foreign Direct Investment (FDI): The sector attracted over $4 billion in FDI inflows, reflecting strong global investor confidence and supply chain realignments via “China Plus One” strategies.
• Employment Generation: The sector serves as a massive engine for job creation, generating approximately 25 lakh direct and indirect jobs over the past decade.

Key Sub-sectors and Localisation Trends

Mobile Phones: The Flagship Success Story

Mobile manufacturing serves as the proof-of-concept for the Make in India initiative, shifting India from an import-dependent consumer to a global supplier.

• Production Scaling: Mobile manufacturing value scaled from ₹18,900 crore in FY14 to ₹4,22,000 crore in FY24, representing a 28-fold expansion.
• Import Substitution: In 2014–15, only 26% of mobile phones sold in India were locally made; today, 99.2% of all mobile phones sold domestically are Made in India.
• Global Ranking: India is now the world’s second-largest mobile phone manufacturer, boasting over 300 manufacturing units compared to just two units in 2014.
• Export Milestone: Mobile phone exports surpassed ₹1,29,000 crore, with smartphones crossing the ₹1 lakh crore mark in the initial five months of a single fiscal cycle alone.

Semiconductor and Display Ecosystem

Semiconductors form the foundational hardware layer for all modern electronics, computing, and strategic defense equipment. India’s strategy focuses on building local fabrication and packaging capacities to insulate domestic industries from global supply chain shocks.

• Approved Infrastructure: The government approved 10 major semiconductor projects across six states with a total combined capital investment nearing ₹1.6 lakh crore.
• Key Industrial Projects: Landmark projects include the Tata Semiconductor Assembly and Test (TSAT) unit in Morigaon, Assam (₹27,000 crore investment), and CG Power’s OSAT (Outsourced Semiconductor Assembly and Test) facility in Sanand, Gujarat (₹7,600 crore investment).
• Design Innovation: Launch of state-of-the-art semiconductor design facilities focusing on advanced 3-nanometer chip design, positioning India in high-end intellectual property (IP) creation.

IT Hardware, Consumer, and Industrial Electronics

Building on the mobile phone framework, targeted localization roadmaps are expanding into high-volume computing and industrial devices.

• Product Localisation Targets: The Indian Cellular and Electronics Association (ICEA) identified 16 key products—including 11 intermediate components and 5 finished goods—for complete localization.
• Target Segments: Deep localization focus has shifted to laptops, tablets, servers, hearables/wearables, smart meters, and advanced printed circuit boards (PCBs) such as flexible and high-density interconnect PCBs.

Institutional and Policy Framework

Production Linked Incentive (PLI) Schemes

The PLI framework forms the financial backbone of India’s electronics strategy, substituting traditional, non-compliant export subsidies with performance-linked fiscal incentives.

India Semiconductor Mission (ISM) 2.0

Launched to broaden the scope of the initial semiconductor policies, ISM 2.0 institutionalizes long-term financing, industry-led research and development, and infrastructure creation for silicon fabrication, compound semiconductors, display fabs, and advanced packaging units.

Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)

SPECS addresses the disability of high capital expenditure in upstream components. It offers a 25% financial incentive on capital expenditure for specialized downstream electronic goods, sub-assemblies, and specialized factory equipment.

Electronics Manufacturing Clusters (EMC 2.0) Scheme

EMC 2.0 focuses on geographical aggregation and industrial infrastructure. It provides financial assistance to set up Special Purpose Vehicles (SPVs) for developing world-class infrastructure, common facility centers, ready-built factories, and plug-and-play industrial parks specifically tailored for global electronics giants.

Strategic Customs and Tariff Interventions

The fiscal framework uses calibrated basic customs duties (BCD) to encourage domestic manufacturing. By reducing import duties on raw materials and machinery (such as inputs for lithium-ion cells, civil aviation parts, and defense components) while maintaining duties on finished electronic goods, the tariff structure incentivizes global brands to set up domestic assembly lines.

Structural Challenges Facing the Sector

Low Domestic Value Addition (The “Screwdriver Technology” Trap)

While India has achieved high volumes in final product assembly, the actual domestic value addition historically ranged between 15% and 20%. Most high-value components—such as processor chipsets, memory modules, display panels, and camera sensors—are imported, keeping domestic operations largely restricted to the final assembly stage.

Infrastructure and Logistics Disabilities

Despite the expansion of the National Industrial Corridor Development Programme (NICDP), Indian electronic manufacturers face higher logistics costs, irregular power supply, and compliance delays compared to competitors in Vietnam, Taiwan, and China, resulting in an inherent 8% to 10% disability factor.

• Component Ecosystem Gaps: The absence of a deep, localized network of Tier-2 and Tier-3 component suppliers forces assemblers to rely on imported parts, extending lead times and requiring higher working capital.

High Capital Cost and Limited Credit for MSMEs

Upstream electronics manufacturing requires high capital expenditure and involves long gestation periods before reaching profitability. While large multinational corporations easily leverage global capital markets, domestic MSMEs struggle with high borrowing costs and rigid collateral demands from commercial banks.

Critical Shortage of Specialized Technical Workforce

The rapid transition from assembly-line work to complex semiconductor fabrication and advanced PCB fabrication has exposed a major talent deficit. India lacks a sufficient pool of specialized electronic design engineers, cleanroom technicians, and automated testing experts, requiring rapid restructuring of higher technical education.

Way Forward and Strategic Roadmap

Transitioning from Assembly to Deep Component Localisation

Policy interventions must shift focus entirely from final product assembly to the local manufacturing of sub-assemblies, passive components (resistors, capacitors, inductors), and precision molds. Successfully executing the localized manufacturing of the 16 target products identified by the ICEA will be critical to raising domestic value addition beyond 40%.

Fast-Tracking Semiconductor Fabrication Autonomy

Ensuring the timely operationalization of approved fabrication units like those in Gujarat and Assam is crucial. India must build a robust, self-reliant domestic chip pipeline to feed its smartphone, automotive electronics, and defense manufacturing plants, thereby decoupling from vulnerable global supply chains.

Strengthening Global Value Chain (GVC) Integration via FTAs

To achieve the $120 billion electronics export target, India needs to systematically integrate into Global Value Chains. This requires renegotiating asymmetric Free Trade Agreements (FTAs) to correct trade imbalances and concluding swift, tariff-aligned trade arrangements with key consumer markets like the United States, the European Union, and Middle Eastern economies.

Synchronized Skill Upgradation and Academic Alignment

The National Skill Development Corporation (NSDC) should partner with global technology leaders to establish specialized Semiconductor and Advanced Electronics training institutes. Introducing industry-aligned curricula in microelectronics, material sciences, and VLSI design across Indian Institutes of Technology (IITs) and engineering colleges will create the high-tech workforce needed to sustain India’s electronics manufacturing growth.